Payday loans

[Woodsey]

Like I said I have no view either way before you start jumping all over my arse.

But if they were so bad a more competitive way of lending would have appeared by now surely?

Credit Unions try but don't have the financial muscle to compete with the likes of Wonga.

I think the market will sort itself out eventually.

Anyone need to borrow up to £1k at 500%    Seems like a good deal 

[redsimon]

http://www.bbc.co.uk/news/business-23078746

interesting article on how wonga works.

[Jon MW]

In Germany, many US states and Canada, there are usury laws that restrict the maximum interest rate paid on a loan. We should have the same laws here. I don't believe Wonga et al. can't survive charging 200% APR, rather than 1000+.

Yeah same here in England, but for some reason Wonga type new money lenders are not under the law, seems unfair.

Is there? I thought it was only Credit Unions that have a legal cap?

[DungBeetle]

They are fine imo.

Guy needs £200 to get to pay day and they provide it.  Charge him £30 to reflect the much higher rate of default than a normal loan.  The APR only looks bad because it is an annual rate and the loans are only supposed to be 2 week loans.

[Tal]

They are fine imo.

Guy needs £200 to get to pay day and they provide it.  Charge him £30 to reflect the much higher rate of default than a normal loan.  The APR only looks bad because it is an annual rate and the loans are only supposed to be 2 week loans.

This is the point, though.

I set up Tal Loans today with a 1000% APR. If I lend £1,000,000 over a year, I'm going to be raking it in. To the end user, £30 for £200 doesn't seem too bad over two weeks, but as long as I'm lending, I'm making muchos wongas.

And Johnny Borrower is only paying £30 because he can't use the same mechanisms everyone else uses and pays £10 or less.

[DungBeetle]

In Germany, many US states and Canada, there are usury laws that restrict the maximum interest rate paid on a loan. We should have the same laws here. I don't believe Wonga et al. can't survive charging 200% APR, rather than 1000+.

They'll survive but their lending criteria will get far stricter.  The £1000% APR allows them to lend to people who are clearly credit risks.

Man in the street won't be happy.

[Jon MW]

They are fine imo.

Guy needs £200 to get to pay day and they provide it.  Charge him £30 to reflect the much higher rate of default than a normal loan.  The APR only looks bad because it is an annual rate and the loans are only supposed to be 2 week loans.

This is the point, though.

I set up Tal Loans today with a 1000% APR. If I lend £1,000,000 over a year, I'm going to be raking it in. To the end user, £30 for £200 doesn't seem too bad over two weeks, but as long as I'm lending, I'm making muchos wongas.

And Johnny Borrower is only paying £30 because he can't use the same mechanisms everyone else uses and pays £10 or less.

More importantly a lot of the borrowers aren't paying it back after 2 weeks. They still haven't got enough money for essentials (like Sky, cigarettes, £1000 for Christmas presents etc) so the loan either gets rolled over and the interest carries on skyrocketing - or they take out a new loan (which they won't be able to repay) to pay off the first one.

[Acidmouse]

It's a mess that is the governments fault for not sorting it out quicker. Obviously cutting the funding to citizens advice  and many other places that people with money problems seek help from does not help and it means these company's flourish even more.

[CHIPPYMAN]

This kind of loan can kill u if u took it . It's like  Chinese people have their own loan shark . Borrowed £1k and u pay £91 per week for 52 weeks ! I think Wonga us taking a piss here by charging 1000% APR . But one thing is I don't understand , why people still goes to them ? I know sometime u can't avoid it but thinking of paying 1000% interest , u got to think twice before taking the loan. Sure there other alternative in this world beside borrowing at that interest rate .

[Jon MW]

... But one thing is I don't understand , why people still goes to them ? ...

The majority - because they're stupid

[DungBeetle]

"I know sometime u can't avoid it but thinking of paying 1000% interest "

The key point is APR is an invalid measurement for a 2 week loan, but they are forced to quote it because the FCA requires it. 

[millidonk]

It's times like this I wish I was a Muslim. Interest free loans ftw.

[CHIPPYMAN]

It's times like this I wish I was a Muslim. Interest free loans ftw.

Lol

[CHIPPYMAN]

... But one thing is I don't understand , why people still goes to them ? ...

The majority - because they're stupid

VERY STUPID

[redsimon]

... But one thing is I don't understand , why people still goes to them ? ...

The majority - because they're desperate

FYP